Silicon Valley-based startup d-Matrix, specializing in artificial intelligence chips, has successfully raised $110 million in funding, with notable support from tech giant Microsoft. This achievement comes at a time when many chip companies face challenges in securing funding. Nvidia’s dominant position in the AI chip market, owing to its powerful hardware and software combination, has deterred potential investors from supporting some startups, according to sources.

The Series B funding round was spearheaded by Singapore-based Temasek and saw participation from Playground Global, a venture firm based in Palo Alto, California, and Microsoft. d-Matrix CEO Sid Sheth emphasized the significance of the funding, stating, “This is capital that understands what it takes to build a semiconductor business. They’ve done it in the past. This is capital that can stay with us for the long term.”

The fundraising process began approximately a year ago for the Santa Clara-based company, although the valuation details were not disclosed. d-Matrix had previously secured $44 million in funding. D-Matrix specializes in designing chips optimized for powering generative AI applications, such as ChatGPT. The company’s chip technology, based on digital “in-memory compute,” enhances the efficiency of AI code execution, requiring less energy to process the data needed for generative AI responses. Notably, the company focuses on the “inference” phase of AI processing, distinguishing itself from Nvidia, which primarily deals with training large AI models.

“We have solved the computer architecture,” explained Playground partner Sasha Ostojic. “We have solved the low power requirements and the needs of a data center built a software stack to deliver the lowest latency in the industry by orders of magnitude.”

Microsoft has expressed its commitment to evaluating d-Matrix’s chip for potential use when it becomes available next year. d-Matrix anticipates revenue of under $10 million for this year, primarily from chip purchases for evaluation purposes. The company projects significant growth, with expected annual revenue of more than $70 million to $75 million within two years, reaching a break-even point, according to Sheth.